NEW YORK (CNNfn) - The Nasdaq composite index's Wednesday follow-up to the biggest one-day gains in its history could be a sell-off, thanks to a warning by Apple Computer that it would post its first quarterly loss in three years.|
Early indications suggest U.S. stocks will open lower.
Apple (AAPL: Research, Estimates) said late Tuesday that significantly lower sales in October and November will cause it to post its first quarterly loss in three years in the three monthsr ending Dec. 30. Sluggish sales forced the company to offer more promotions and to cancel orders for components.
Apple shares tumbled $3 to $14 in before-hours trading Wednesday after closing up 31 cents in regular-hours dealings Tuesday.
The computer maker's warning promises to take back at least some of the record 10 percent gain that the tech-laden Nasdaq achieved Tuesday. The gains came after Federal Reserve Chairman Alan Greenspan, in a New York speech, acknowledged the slowing economy and encouraging speculation that an interest rate cut could be on the horizon.
"Our official forecast is they'll cut them(rates) twice. They'll cut them in the first quarter, they'll cut them in the second quarter," John Manley, stock strategist with Salomon Smith Barney, told CNNfn's Ahead of the Curve Wednesday.
Also helping the Tuesday rally was a Florida court decision that appeared to bring the presidential election stalemate to a close. But trials begin Wednesday in absentee ballot challenges by Democrats in two Florida counties that could, if either of the suits succeed, put Al Gore ahead of George W. Bush in the battle for the state's 25 electoral votes.
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The Nasdaq 100 futures dropped 31 points to 2,809.50 in early trading. That put the futures 47.93 points below fair value, a benchmark set daily by traders based on future contracts and their underlying stocks, meaning traders expect a lower open for the Nasdaq market.
S&P futures, the most widely watched futures contract, lost 1.70 points to 1,372.50 on the Globex trading system. That left futures 5.85 points below fair value, suggesting a lower open for the S&P 500.
The S&P futures are also watched as an indicator of the Dow Jones industrial average, with one point of difference between the futures index and fair value equal to about eight points on the Dow. So the S&P futures suggested the blue chip indicator would open down about 47 points.
On Tuesday, U.S. stocks surged on the strength of Greenspan's comments and the Florida ruling. The Nasdaq soared 274.05 points, a 10.5 percent gain, to 2,889.80. The Dow gained 338.62, or 3.2 percent, to 10,898.72, and the S&P 500 jumped 51.57, or 3.9 percent, to 1,376.54.
In Asia Wednesday, major markets rose on the coattails of the record-breaking day on the U.S. markets. In morning trading in Europe, the major bourses climbed as well, buoyed by the strength of the one-day rally in the U.S. markets.
In the Treasury market, the 30-year bond was little changed, its yield steady at 5.59 percent. The 10-year note was also little changed, yielding 5.42 percent.
In the currency market, the dollar weakened versus the euro but gained slightly against the yen in early trading. The euro climbed to 88.47 cents from 88.03 cents in late trading Tuesday, while the dollar rose to 110.84 yen from 110.79 yen.
Oil prices increased in London trading Wednesday. The price for Brent crude for February delivery rose 18 cents to $27.95 a barrel.
In other company news, Robert Nardelli, chief executive of General Electric's (GE: Research, Estimates) Power Systems business and one of the finalists who was passed over to succeed Jack Welch as GE's CEO, was named CEO of Home Depot instead Tuesday evening.
Shares of Home Depot (HD: Research, Estimates), a Dow component, gained $2.87 to $43.63 Tuesday.
Northrop Grumman, which has prospered because of pension-fund investments in the past, warned that reduced income from those investments this year could lower its earnings for 2001, according to a published report.
Northrop Grumman (NOC: Research, Estimates) shares closed up $2.56 to $85 Tuesday.
AT&T Corp.'s Broadband unit is trying to unload some of its newly acquired cable TV systems that could be worth at least $3 billion, according to a published report.
AT&T (T: Research, Estimates) shares inched up 63 cents to $20.37 Tuesday.
Standard & Poor's said Tuesday three companies from the S&P 500 index will be replaced by three companies from its MidCap 400 Index.
Standard & Poor's said QLogic (QLGC: Research, Estimates), a storage area networks infrastructure provider, semiconductor maker Vitesse Semiconductor (VTSS: Research, Estimates), and specialty surgical and medical products maker Stryker (SYK: Research, Estimates) will be added to the S&P 500 index after the market closes on Dec. 11.
Those companies will replace film and camera maker Polaroid (PRD: Research, Estimates), textile maker Springs Industries (SMI: Research, Estimates) and athletic apparel maker Russell (RML: Research, Estimates).
In addition, Standard & Poor's said consumer products maker Gillette (G: Research, Estimates) will replace Polaroid on the S&P 100 index.